The Village of Kewaskum and the Labor Association of Wisconsin, Inc., for and on
behalf
of the Kewaskum Police Association, Local 314 are parties to a collective bargaining
agreement
which provides for the final and binding arbitration of certain disputes. The Association
filed a
request to initiate grievance arbitration with the Wisconsin Employment Relations
Commission for
arbitration of a grievance filed by Local 314 President, Troy Ellis on behalf of Local 314 as
to the
payment of health insurance premiums for retired Association members. From a panel the
parties
selected Paul Gordon, Commissioner, to serve as arbitrator. Hearing was held in the matter
on
November 8, 2007 in Kewaskum, Wisconsin. A transcript was prepared and made available
to the
parties. The parties filed written briefs and arguments and the record was closed on
February 11,
2008.

ISSUES

At the hearing the parties stipulated to a statement of the issues as:

Whether the Village's interpretation and application of Section 19.07 violates the
terms of the collective bargaining agreement?

If so, what is the appropriate remedy?

7292

Page 2

MA-13673

RELEVANT CONTRACT
PROVISIONS

ARTICLE III ­ GRIEVANCE
PROCEDURE

. . .

Section 3.04: The arbitrator shall
have the authority to interpret this
Agreement in arriving at a determination of any issue presented which is proper for
final and binding arbitration, but the arbitrator shall have no authority to add to,
subtract from or modify any of the provisions of this Agreement. The arbitrator shall
not have authority to grant wage increases or wage decreases. The arbitrator shall
expressly confine himself or herself to the precise issue(s) submitted for arbitration
and shall have no authority to determine any other issue not so submitted to the
arbitrator nor shall the arbitrator submit observations or declarations of opinion
which are not essential in reaching the determination.

. . .

ARTICLE X ­ SICK LEAVE

. . .

Section 10.07: Retirement health insurance bank is
designed to work as follows: A full-time
Officer must work one (1) full calendar year as a full-time employee to be eligible for
participation
in the retirement health insurance bank. After he/she has completed one (1) full year, the
number
of sick days which he/she had used during that calendar year will be the determining factor
in
calculating the number of retirement health insurance days he/she has accrued. This
computation
will take place on or immediately after January 1st of every year and the
Officer will then be notified
of the number of days he or she currently has in his/her retirement health insurance bank.
Each
employee shall be allowed to accrue up to one hundred twenty (120) retirement health
insurance
bank days. When an employee retires, including disability retirement, the days contained in
the
employee's retirement health insurance bank on the date of retirement will be converted into
a dollar
equivalent based on the rate of pay in effect on the date of retirement. The Employer will
retain the
money accumulated in the retirement health insurance bank and utilize it to pay health
insurance
premiums for the retired employee. At the employee's option, the Village will make
premium
contributions to a health insurance carrier other than the group health insurance plan. If the
employee elects this option, the employee must submit an invoice to the Village and the
Village will
pay the insurance carrier directly from the employee's accrued retirement health insurance
bank. If
the employee opts not to enroll in the Village's health insurance plan at the time of
retirement, he/she
may not enroll in the plan at a later date. After the employee has used all of his/her accrued
retirement health insurance bank, he/she shall be allowed to remain in the health insurance
program,
provided that the employee pay the full premium to the Village on a monthly basis. The
following
schedule will apply:

. . .

Page 3

MA-13673

ARTICLE XIX ­ GROUP HEALTH
INSURANCE

. . .

Section 19.04: The Village will pay
ninety-two and one-half percent (92.5%)
of the premium cost of the single or family plan for full-time Officers and the Officer
will pay the balance of the premium through payroll deduction.

. . .

Section 19.07 ­ Retired
Employees: A retired employee may continue to
participate in the Village's group health insurance plan for active employees, and
shall be subject to all changes in the carrier, administration, benefit levels, and other
terms as those that are negotiated for active employees. The Village and retired
employees shall pay premiums as set forth in Section 19.04. Retired employees may
remain in the group health insurance plan until they become eligible for Medicare or
insurance coverage from another source.

BACKGROUND AND FACTS

The Village of Kewaskum operates a Police Department. The Association is the
exclusive
bargaining agent for all regular full-time and regular part-time police officers with the power
of
arrest employed by the Village of Kewaskum, excluding the Chief of Police and supervisory,
managerial and confidential employees. Officer Troy Ellis has been the President of Local
314 for
the last approximately 12 years and has been on the bargaining committee for that long. He
filed the
grievance herein on behalf of the membership of Local 314. There are approximately seven
members in Local 314.

Since at least the 2001­2003 collective bargaining agreement there has been a
provision for
a retirement health insurance bank in the basic form and substance as contained in
Section 10.07 and
which remained in all subsequent agreements. Basically, it converts unused sick leave into a
retiree
health insurance bank for each particular employee. The Village also has an AFSCME
collective
bargaining agreement for a different collective bargaining unit of employees which contains a
similar
retirement health insurance bank, as well as a similar arrangement for the Village's
non-represented
employees.

In negotiations that produced the 2004­2006 collective bargaining agreement
between the
parties the Village, through Attorney Nancy Pirky, proposed adding language which during
that
bargain eventually became Section 19.07, and which remains in the 2007-2009 agreement.
The
Village wanted to make Local 314's contract consistent with the AFSCME contract which at
that
time contained an additional provision. The Village wanted retirees' health insurance to
move with
the active employees' plan benefits so that retirees' plan benefits would not vest and remain
the same
upon retirement. Rather, retiree health insurance benefits would change as the benefits
changed for
actives. The Village did not state during negotiations that it would pay any portion of retiree
health
insurance premiums. Pirky believed at the time that the language provides upon retirement
the
Village would use the sick leave bank to pay the 92.5

Page 4

MA-13673

percent for the retiree just the way it had been paying that same percentage for actives.
The
remaining 7.5 percent would come from the retiree. She understood this to be the same as
was being
done with the AFSCME employees, and said so at the negotiations. The contract language
in the
AFSCME agreement is not identical to the Local 314 language. The Village proposed that
the 92.5
percent of the premium would be paid from the sick leave bank. Ellis, who was on the
negotiations
team for Local 314, did not believe at the time that what was being proposed was the Village
actually
paying the 92.5 percent of the retirement health insurance premium because at the time
nobody in
his bargaining unit had retired. At the time he didn't look at it because it didn't apply to
anybody.
The parties' discussions focused, instead, on the premium deductibles, co-pays and pharmacy
co-pay
changes proposed by the Village. The parties did not discuss that the Village was going to
fund the
92.5 percent of retiree health insurance in exchange for Local 314 agreeing to the health
insurance
premiums proposed. There was no discussion of any quid pro quo with
regard to Section 19.07. The
Association proposed a change in Section 10.07, which added language regarding the
retiree's ability
to have the sick leave bank money paid to a different insurance plan. The Association was
concerned about premium payments for members who may retire, move out of the area or
have other
insurance plans available other than the Village plan. The Village eventually accepted the
proposal
after crafting the language concerning the Village paying the other carrier from an invoice.
The
language added to Section 10.07 is:

At the employee's option, the Village will make premium contributions to a health
insurance carrier other than the group health insurance plan. If the employee elects
this option, the employee must submit an invoice to the Village and the Village will
pay the insurance carrier directly from the employee's accrued retirement health
insurance bank. If the employee opts not to enroll in the Village's health insurance
plan at the time of retirement, he/she may not enroll in the plan at a later date.

This language remained in subsequent collective bargaining agreements.

In early 2007 when one of the Local 314 members was looking into retirement a
question
arose on payment of health insurance premiums. The Association and the Village conferred
on the
matter. The Association position was that a retired member is only responsible for seven and
one-half percent of the premium, which is to be paid from the retirement health insurance
bank, with the
Village paying the rest from sources other than the retirement health insurance bank account.
The
Village position was that the retired employee pays the seven and one-half percent, through
payments
to the Village, and the Village pays the balance of the premium from the particular retired
employee's retirement health insurance bank account. Once the total amount in the retired
employee's retirement health insurance bank account was expended the retired employee
would be
responsible for paying the total premium to the Village for coverage. The parties were not
able to
reach an agreement on the import of the language in their collective bargaining agreement,
and the
instant grievance was filed to resolve the issue. That led to this arbitration.

Page 5

MA-13673

Several examples(1)
approximate what the relative financial implications are for the Village
and two retirees in two situations, assuming increases in premium costs and certain Medicare
eligibility dates which admit of some variability. Both assume an initial monthly total
insurance
premium of $1043.19. One member of Local 314, Officer Buddenhagen, retired in July,
2007 while
the grievance and arbitration was pending. He will assumedly reach Medicare eligibility on
or about
June 30, 2015. As of June 30, 2007 he had the value of $23,990.00 in the retirement health
insurance bank. If 100 percent of the health insurance premiums were to come from his sick
leave
bank it would run out in just under two years. If the Village were to pay 7.5 percent of
health
insurance premiums from the sick leave bank with the Village otherwise assuming the rest, it
would
have a balance of $13, 739.25 at Medicare eligibility.(2)

The total cost of the insurance, assuming a
6% increase each year, would then be approximately $143,851.00 until June 30, 2015
(assumed
Medicare eligibility). As of the date of the hearing, another member, Thomas Bauer,
anticipated
retirement as of February 1, 2008. He will assumedly reach Medicare eligibility on or about
February 1, 2018. As of February 1, 2008, his approximate balance in the retiree health
insurance
bank would be $24,969.00. If 100 percent of the health insurance premiums were to come
from his
sick leave bank it would run out in just under two years. If the Village were to pay 7.5
percent of
health insurance premiums from the sick leave bank, with the Village otherwise assuming the
rest,
it would have a balance of $10,913.16 at assumed Medicare eligibility.(3)The total cost of the
insurance, assuming a 6% increase each year, would then be approximately $187,419.21.
For both
retiree examples there is nothing in the record to indicate that the above assumptions,
percentages,
monthly amounts, balances, plan coverage, participation of retirees, or anything else will
actually
occur in the future.

When Buddenhagen retired the Village began paying 92.5 percent of his monthly
health
insurance premium from the retiree health insurance bank, the balance came out of pocket
from
Buddenhagen, who paid 7.5 percent of the premium to the Village. This is different than
how the
Village was administering the AFSCME and non-represented retirees who remained insured.
For
those retirees, the Village paid 100 percent of the health insurance premiums from the
respective
retirees' health insurance banks. These others did not make a separate out of pocket
payment to the
Village for any percent of the premiums. In preparation for the grievance arbitration hearing
in the
instant case, the Village discovered this difference. The Village wrote to the Association's
Representative explaining that the Village had wanted to calculate and pay the police retiree
benefits
the same as it did for the other retired employees, and had been in error in calculating the
retiree
health insurance benefits for Officer Buddenhagen. The Village indicated its position that it
should
be paying 100 percent of Buddenhagens's health insurance premiums from his retiree health
insurance bank, and would be refunding him the amount he paid for the 7.5 percent of the
premiums
since he retired. The

Page 6

MA-13673

letter, dated November 6, 2007, reiterated the Villages' arbitral position in this case as
well. As to
how it had been administering Buddenhagen's premiums, it stated in pertinent part:

At the time we bargained the 2004-2006 language, we believed the past
practice was that the Village paid 92.5% of the premium cost for retiree health
insurance from the retiree health insurance bank as set forth in Section 10.07. In
preparing for the arbitration hearing, we have learned that the past practice on this
issue is for the Village to pay 100% of the premium cost for employees who retire
under the AFSCME contract or as a non-represented employee, out of the retiree
health insurance bank. There have been no officers who retired under the language
of Section 10.07 to confirm the Village's interpretation of Section 10.07. Because
our intent in bargaining the disputed language of Section 19.04 of the police contract
was to be consistent with the AFSCME contract, we have determined that we made
an error in calculating the retiree health insurance benefits for Officer Buddenhagen.
To be consistent with the past practice, we should be paying 100% of Officer
Buddenhagen's health insurance premiums from his retiree health insurance bank as
set forth in Section 10.07 of the collective bargaining agreement. We will be
notifying Officer Buddenhagen of this fact and making arrangements to refund the
amount he has paid for the 7.5% of his health insurance premium since his
retirement.

At the time of negotiating the 2004-2006 agreement with Local 314, Pirkey had been
under the
misunderstanding that the Village was only paying 92.5 percent of the premiums from the
AFSCME
and non-represented retiree health insurance banks, rather than 100 percent from the banks.

The grievance is signed March 1, 2007, alleging a date of grievance of February 21,
2007.
It contends that on February 21, 2007 the Village informed the Association that the Village
will not
pay 92.5% of the premium for a retired employee's health insurance. The grievance
referenced
Sections 19.04 and 19.07 specifically, and generally Articles II and XIX as well as any other
Article,
Section, work rule or past practice that may be applicable. The grievance alleged, in
essence, that
the Village is required to pay the 92.5% of the premiums as required by the language in the
agreement, as was the intent of the parties, and that the Village had exercised its
management rights
in an unreasonable manner.

Further facts appear as are in the discussion.

POSITIONS OF THE PARTIES

The Association

In summary, the Association argues that the language found in the agreement is clear
and
unambiguous. Where the contract language is clear and unambiguous, the arbitrator should
give no
other meaning other than that expressed, citing arbitral authorities. The Association believes
that
using the plain meaning of the language found within the four corners

Page 7

MA-13673

of the collective bargaining agreement is sufficiently clear in explaining the
contribution the Village
must make towards health insurance after an employee retires. The language in Section
19.07
mandates the Village shall pay the premiums as set forth in Section 19.04. Section 19.04
requires
the Village to pay ninety-two and one-half percent of the premium cost for the single or
family plan.
The parties have agreed to this provision in the collective bargaining agreement and it must
be
followed. If not, the Village must be held accountable.

The Association argues, whoops I made a mistake ­ so says the Village. The
language has
been in place since the 2004-2006 contract. In those negotiations the Village proposed
changes, one
being adding new section 19.07. The parties entered into a voluntary settlement of the
agreement
which included new Section 19.07. Association President Ellis testified that his
understanding of
the Village's proposal was for the Village to pay ninety-two and one-half percent of the
insurance
premiums for retired employees and that the retired employees would pay the remaining
seven and
one-half percent, the same as active employees, referencing testimony. Ironically, the
Village takes
the position than an error was made in drafting the current language in Section 19.07. It is
mind-boggling. For over a decade health insurance and employee/retiree contributions for
health insurance
have been a major issue at the bargaining table. To believe that a veteran labor attorney,
from one
of the largest labor law firms in the state of Wisconsin made a "mistake" in this issue is
incredulous.
The employer created, drafted and proposed Section 19.07, brought it to the bargaining table
stressing its importance to the Association in order to achieve a voluntary settlement. This is
the
very essence of collective bargaining. The employer did not make a mistake in drafting
Section
19.07 but, is making a mistake by trying to modify the clear and unambiguous language in
Section
19.07 through grievance arbitration rather than collective bargaining. The language has not
changed
since the 2004-2006 contract. The Village should have addressed the "mistake" during
negotiations
for the current agreement. The Village is in the wrong forum.

The Association also argues that desperate, the Village now tries an end run and
wants to tie
19.07 to 10.07. The Village argued that the meaning of Section 19.07 must be read in
conjunction
what Section 10.07, reading both together with the intent for retired employees to pay 100%
of the
health insurance premiums out of their health insurance bank. The Association would agree
to the
fact that Section 10.07 was created to pay health insurance premiums for retired employees.
When
the Parties agreed to add Section 19.07 to the contract, the meaning of Section 10.07 did not
change.
Prior to Section 19.07, it was the Association's position that retired employees used their
health
insurance bank to pay health insurance premiums. When the parties added Section 19.07 that
requires the Village to pay 92.5% and retired employees pay the remaining 7.5%, the
position of the
Association never changed. As testified to during the hearing by Association president Ellis,
it is
the Association's position that retired employees may use their health insurance bank to pay
the
remaining 7.5% of the health insurance premium, referencing testimony. The language
within the
four corners of the contract greatly supports the Association's position. To agree with the
Village
position would require the arbitrator to ignore the plain language of Section 19.07 that
mandates the
Village and retired employees to pay premiums as set forth in Section 19.04.

Page 8

MA-13673

The Association further argues that the grievance procedure guidelines for an
arbitration
decision favors the Association's position. Section 3.04 establishes the guidelines in which
the
arbitrator shall base his decision, emphasizing the arbitrator shall have no authority to add to,
subtract from, or modify any provisions of this agreement. For the arbitrator to agree with
the
Village, he would have to subtract or modify the very same contractual language that the
Village
proposed during the 2004-2006 negotiations. This would not be consistent with the grievance
procedure language. The Village, if unhappy with the language, should go through collective
bargaining to achieve a change and not by grievance arbitration.

The Association argues there is no bona fide past practice. It has
been well established that
in order for a past practice to be valid, certain conditions must be met. Two common
elements
clearly lacking are mutual understanding and mutual agreement. Clearly there is no mutual
understanding or mutual agreement in the instant case. During the grievance process the
Village
maintained that the past practice was the Village paid 92.5% from the retired employee's
retiree
health insurance bank. However, two days prior to the arbitration hearing the Village sent a
letter
advising the Village realized that the actual practice was for the Village to deduct 100% of
the
insurance premium cost for retired employees from the retired employee's retiree health
insurance
bank. To claim there is a "bona fide past practice" when the Village changed its own
application of
Section 10.07 a couple of days before this hearing illustrates that their concept of a past
practice is
inconsistent with arbitral law. Further, only two employees of the Village have retired,
neither one
being a member of the Police Association. One was an AFSCME member, the other
non-represented. The language in the AFSCME contract and the non-represented program is
silent as
to retiree health insurance or different, citing the AFSCME contract Section 14.05. The
Police
contract is the only document that mandates the Village will pay 92.5% of the premiums for
retired
employees, citing testimony. Any argument alleging a past practice would lack mutual
understanding, mutual agreement and taking place over a long period of time. There cannot
be a past
practice when there has been no employee from the Police Association who retired under the
specific
terms and conditions of the Police contract. The Village is incorrect to compare the
AFSCME
contract and Non-rep program to the Police language, which is the only contract that contains
the
requirement that the Village pay the same percentage towards the insurance premiums for
retirees
as it does for active employees.

The Association requests that the arbitrator order the Employer to make the
appropriate
health insurance contributions to the retirees as set forth in Section 19.04 and Section 19.07
of the
collective bargaining agreement and sustain the Association's grievance.

The Village

In summary, the Village argues that when adopting Section 19.07 of the collective
bargaining
agreement, the parties did not intend for the Village to pay retiree health insurance premiums
from
any source other than the retirement health insurance bank. The parties' intent is the goal
and source
of contract interpretation, citing arbitral authority. The evidence shows

Page 9

MA-13673

that when the Village and the Union agreed to include Section 17.09 in the collective
bargaining
agreement, neither party intended for the Village to pay its portion from any source other
than the
retirement health insurance bank. The Village intent was clearly communicated, the Union
raised
no objections, and the proposed language was agreed to without modification. To suggest that
the
intent of Section 19.07 was for the Village to take on the obligation of paying premiums
from any
source other than the retirement health insurance bank leads to absurd and unreasonable
results. The
Village would have received nothing in return for a huge benefit to the Union. Retirees
would have
significantly better health insurance benefits than the active employees. Other provisions of
the
collective bargaining agreement, such as in Section 10.07, would become obsolete.

The Village argues that bargaining history demonstrates that the Village clearly
communicated its intent during the negotiations, the Union asked no questions, raised no
objections,
and the Village's proposed language was adopted by the parties without modification. The
Village
intent was to make all police officer retirees subject to the same health insurance premium
payment
schedule as the active police officers, and to create uniformity among retirees from all
departments.
All others outside the police department have retirement insurance banks which operate
similar to
that in Section 10.07. They have had the Village portion of their health insurance premiums
paid
from the retiree's health insurance bank. Proposing Section 19.07 was the Village intent to
pay its
portion of the police retirees' premiums from the police retirees' retirement health insurance
bank
as well. The Village communicated this to the Union during negotiations for the 2004-2006
contract.
Nancy Pirky stated the intent to make the police department retirees subject to the same plan
and
benefit as actives, and align the payment scheme with that of other Village retirees. The
Union had
no evidence to contest this, and the Union President stated Pirky "may have" informed the
Union
negotiators of that intent. He also admitted that the Village never stated during negotiations
that it
would pay any portion of the retiree health insurance premiums from a source other than the
retirement health insurance bank. To accept the Union's claim would be outrageous
considering the
Village received nothing from the Union at the bargaining table for such an enormous
financial
obligation. The Union did not even consider the provision to have the intent the Union now
claims,
citing testimony. And, the Union acquiesced to the Village intent when the Union failed to
object
to, or even question, the language of the proposed provision or the Village's expressed
interpretation,
citing arbitral authority.

The Village also argues that the absurd and unreasonable results of interpreting
Section 19.07
as the Union advocates demonstrates that the parties could not have intended such an
interpretation.
Citing arbitral authority, the Village contends an absurd and unreasonable result would occur
if one
accepted the Union interpretation of Section 19.07. This would render Section 10.07
obsolete,
provide better health insurance benefits than active employees, and cause significant
economic harm
to the Village. If Section 19.07 were interpreted as the Union suggests, and the Village was
required
to pay 92.5% of the retirees' health insurance premiums from a source other than the
retirement
health insurance bank, retirees using the bank to pay their 7.5% contribution would have
huge
balances left when they become eligible for Medicare. This result would directly contradict
Section
10.07 which states

Page 10

MA-13673

in part that "After the employee has used all of his/her accrued retirement health
insurance bank,
he/she shall be allowed to remain in the health insurance program, provided that the
employee pay
the full premium to the village on a monthly basis." This language would become obsolete
because
at a 7.5% draw there would be more than enough money in a retiree's bank until Medicare
eligibility
to ensure the employee never uses his or her accrued retirement health insurance bank. Ellis
essentially admitted this, citing testimony. Ellis also agreed with the Buddenhagen and Bauer
charts
as presented by the Village. Common sense has to prevail. Why would a retiree walk away
from
the kind of money the 7.5% draw charts have at Medicare eligibility? They'd be walking
away from
thousands of dollars. The Union's Medicare supplemental insurance position does not have
merit
because retirees were ineligible to continue using the Village plan or the retirement health
insurance
bank once they reach Medicare eligibility. Ellis admitted a Medicare supplement was not the
intent
of the parties at the time the new language was added to Section 10.07, citing testimony.
These
funds are out of the system at Medicare eligibility and could no longer be used. Section
10.07 and
Section 19.07 must be read in conjunction. To read Section 10.07 the way the Union
advocates
ignores the purpose and plain language of Section 10.07.

The Village contends that the Union's interpretation of Section 19.07 would create the
inexplicable inequity of retirees receiving a greater health insurance benefit than active
employees.
Retirees would pay nothing out of pocket for coverage, possibly for their lifetime, while
actives
would pay 7.5% out of pocket for health insurance. At this rate, the bank for each retiree
would
likely remain funded for years, if not for the entire life of the retiree. Using the bank for
Medicare
supplemental insurance is also better coverage than actives. To provide better benefits to
retirees
than actives would be extraordinarily unusual, the Village would never agree to it, and it is
not
credible to suggest the Union would negotiate better retiree terms than for current dues
paying
members.

The Village further argues that the Union's interpretation of Section 19.07 would
place a
significant economic burden on the Village. It would cost the Village up to $150,000.00 per
retiree, an astronomical cost it could not absorb. There is no way the Village would agree
to, let
alone itself propose, such terms.

The Village argues it is illogical to believe that the Village would have ever offered
such a
huge benefit to the Union without receiving anything in return. By the Union's own
admission the
Village received absolutely nothing in return for its magnanimously gracious gift to the
Union. The
Union did nothing, asked no questions, and expressed no gratitude because the Union never
believed
the Village was proposing it pay from any source other than the bank. The Village never
proposed
a quid pro quo. The Union admitted it received wage increases each year.
It cites no take-aways or
reductions in benefits. It is infeasible to believe that the Village would make the offer
claimed by
the Union.

Additionally, the Village contends that the fact that the Village erred in the initial
handling
of Officer Buddenhagen's retiree health insurance does not adversely affect the Village
position in
this case. During preparation for the hearing it was discovered that an error

Page 11

MA-13673

had been made in drafting Section 19.07. The Village retirees outside the police
department paid
nothing out of pocket. Rather, 100% of the premium was paid out of the bank for the
retiree, until
the money was exhausted, at which time the retiree was free to continue if he/she paid the
entire
premium. Once the Village realized this it notified the Union and Officer Buddenhagen of
the error,
advising Buddenhagen it would reimburse him from his retirement health insurance bank for
the out
of pocket he had paid, and that 100% of future premiums would be paid from the bank until
exhausted. The Village regrets the error. It has no bearing on the core case. The dispute is
the
question of whether the Village agreed to pay any portion of the premium from any source
other than
the bank. The Village pays no portion of the retirement health insurance premium for other
Village
employees outside the police department. This supports Pirky's testimony of the Village
intent. The
fact that an error was made is irrelevant.

The Village also contends that the Union's argument regarding the clear and
unambiguous
language of the collective bargaining agreement does not address the issue in dispute. The
Union
offers no evidence to disprove that the Village made a valid mistake when drafting Section
19.07,
and, in any event, the mistake is irrelevant to the issue in dispute. At the time the parties
agreed to
Section 19.07, the Union did not believe the Village was agreeing to pay any portion of the
retiree
health insurance premiums from any source other than the retirement health insurance bank.
The
Village intends to pay 100% of police department retirees' health insurance premiums from
the
retirement health insurance bank to honor the original intent of Section 19.07. The Village
has never
suggested the existence of a past practice between the Village and the Union.

The Village requests that the grievance be dismissed.

DISCUSSION

Pursuant to Section 10.07 of the collective bargaining agreement, active Association
Members can have unused sick leave days converted into a dollar amount at retirement and
have that
amount placed into a retirement health insurance bank (the Village retaining the funds) with
those
funds being used to pay health insurance premiums for the retiree. The parties disagree on
the
interpretation and application of Section 19.07 of the collective bargaining agreement and its
intent.
The Section states:

Section 19.07 ­ Retired Employees:
A retired employee may continue to
participate in the Village's group health insurance plan for active employees, and
shall be subject to all changes in the carrier, administration, benefit levels, and other
terms as those that are negotiated for active employees. The Village and retired
employees shall pay premiums as set forth in Section 19.04. Retired employees may
remain in the group health insurance plan until they become eligible for Medicare or
insurance coverage from another source.

The Association takes the position that the language is clear and unambiguous; by
reference to
Section 19.04, the Village is obligated to fund 92.5 percent of a retiree's health insurance
premium
from Village funds other than the retirement health insurance bank, with the retiree's

Page 12

MA-13673

retirement health insurance bank being the source of the retiree's 7.5 percent of the
premium cost.
Section 19.04 states:

Section 19.04: The Village will pay
ninety-two and one-half percent
(92.5%) of the premium cost of the single or family plan for full-time Officers and
the Officer will pay the balance of the premium through payroll deduction.

The Village takes the position that the 92.5 percent share of premium cost is to be paid
from the
retiree's retirement health insurance bank, that it has no obligation to pay premiums from
any source
of funds other than the retiree's retirement health insurance bank, and that obligation ends
when the
funds in the retiree's bank are depleted. Section 10.07 states in pertinent part:

Section 10.07: Retirement health insurance
bank is designed to work as
follows: A full-time Officer must work one (1) full calendar year as a full-time
employee to be eligible for participation in the retirement health insurance bank.
After he/she has completed one (1) full year, the number of sick days which he/she
had used during that calendar year will be the determining factor in calculating the
number of retirement health insurance days he/she has accrued. This computation
will take place on or immediately after January 1st of every year and the
Officer will
then be notified of the number of days he or she currently has in his/her retirement
health insurance bank. Each employee shall be allowed to accrue up to one hundred
twenty (120) retirement health insurance bank days. When an employee retires,
including disability retirement, the days contained in the employee's retirement
health insurance bank on the date of retirement will be converted into a dollar
equivalent based on the rate of pay in effect on the date of retirement. The Employer
will retain the money accumulated in the retirement health insurance bank and utilize
it to pay health insurance premiums for the retired employee. At the employee's
option, the Village will make premium contributions to a health insurance carrier
other than the group health insurance plan. If the employee elects this option, the
employee must submit an invoice to the Village and the Village will pay the
insurance carrier directly from the employee's accrued retirement health insurance
bank. If the employee opts not to enroll in the Village's health insurance plan at the
time of retirement, he/she may not enroll in the plan at a later date. After the
employee has used all of his/her accrued retirement health insurance bank, he/she
shall be allowed to remain in the health insurance program, provided that the
employee pay the full premium to the Village on a monthly basis. The following
schedule will apply:

Prior to the instant grievance being filed no Association Member had retired and
sought retiree
health insurance premium payments pursuant to the collective bargaining agreement.

Page 13

MA-13673

Both parties present a plausible reading of parts of the agreement that favors their
respective
positions. Reading sections 19.07 and 19.04 together, as the Association does, payment by
the
Village of premium costs above 7.5% is plausible, especially in the absence of any reference
to the
source of funds. On the other hand, Section 10.07 does refer to using the bank to pay
insurance
premiums, and this supports the Village position. Thus, when reading all three Sections
together
there is an ambiguity.

When faced with an ambiguity the intent of the parties along with the language of the
agreement is critical. The best evidence of the intent of the parties as to the meaning of the
provisions is in the language itself used in the collective bargaining agreement. In
interpreting
collective bargaining agreement language, the provisions must be read together giving
meaning to
all and rendering none of them meaningless. Bargaining history is also an aide in
ascertaining the
intent of a provision, particularly where there is ambiguity in the contract language.

Section 10.07 states that the Employer will retain the money accumulated in the
retirement
health insurance bank and utilize it to pay health insurance premiums for the retired
employee. This
is clear language that the source of funds to pay the premiums is the bank. The balance of
the Section
also makes it clear that there is a limited amount of days or funds that can be accumulated in
the
bank. This is a specific section that deals with retiree bank funding and the use of the bank
to pay
premiums without differentiating between employer and employee. Generally a specific
provision
controls over a more general provision. This supports the Village position.

While Section 19.07 does specifically refer to premiums being paid as set forth in
Section
19.04, it does not specify whether the employee contribution is to come from the bank or
not. The
Association argues that the language is clear and unambiguous and that the plain meaning of
the
language in the collective bargaining agreement explains the contribution the Village must
make
towards health insurance after an employee retires. Section 19.07 mandates the Village shall
pay the
premiums as set forth in Section 19.04. Section 19.04 requires the Village to pay 92.5
percent of the
premium cost. The Association argues the clear meaning of the contract must be enforced
even
though the results may be harsh or contrary to the original expectations of one of the parties.

An examination of Section 19.04 shows that it cannot be applied to a retiree as
literally
written. The Section provides that the Officer pays the balance of the premium through
payroll
deductions. A retired Officer is no longer on the payroll and cannot make a payment
through payroll
deductions. Section 19.04 does not mention retired Officers. It only referenced full time
Officers.
If the retiree were to make a premium payment of 7.5 percent to the Village from out of
pocket, that
would be consistent with actives' payroll deduction. The same would hold if the 7.5 percent
came
from the bank. And that part of Section 19.07, when applied to Section 19.04, would
not be
rendered meaningless.

Page 14

MA-13673

There is also the matter of how other parts of Section 10.07 refer to the bank
balances being
used up, particularly the phrase:

After the employee has used all of his/her accrued retirement health insurance bank,
he/she shall be allowed to remain in the health insurance program, provided that the
employee pay the full premium to the Village on a monthly basis.

This language anticipates that a retired Officer might have to pay the full premium. If
the Village
were required to pay 92.5 percent of the premium from funds or sources other than the bank,
then
the retiree would not have to pay the full premium. But, the language does require full
payment by
the retiree. This eliminates a requirement that the Village pay any part of the premium once
all the
funds in the accrued retirement health insurance bank are used. This is a clear statement that
the
source of all premium costs is the retirement health insurance bank, not just the 7.5 percent.

Additionally, as the Village argues, the Association's position would render the above
referenced sentence meaningless. If the Village were required to pay 92.5 percent of the
premium
even after the bank was used up, then the retiree would not have to pay the full premium.
Arbitral
interpretations of contracts cannot render parts of it meaningless. The provision would still
have
meaning under the Village position because the Village would have no obligation to pay
anything
after the bank was used up because the retiree would have to pay the full premium.

A similar result follows from the language in Section 10.07 which states:

At the employee's option, the Village will make premium contributions to a health
insurance carrier other than the group health insurance plan. If the employee elects
this option, the employee must submit an invoice to the Village and the Village will
pay the insurance carrier directly from the employee's accrued retirement health
insurance bank.

This is a specific reference to the bank being the source of funds that the Village is to
use to pay
premiums.

Any ambiguity created by the tension between combined Sections 19.07 and 19.04,
and
Section 10.07, is resolved by reading the above three Sections together, giving meaning to all
and
rendering none meaningless when the bank alone is considered the source of the 92.5 percent
of the
premiums. This result is also supported by bargaining history. It does not add to, subtract
from or
modify anything in the agreement's language

There is an issue as to what the Association negotiators understood Section 19.07
meant
when it was proposed by the Village in the 2004-2006 bargaining. At the hearing the
Association
president testified in direct examination that his understanding of the proposed

Page 15

MA-13673

language was that the Village would pay 92 and one-half percent and the member
would pay 7 and
one-half percent based on the language in 19.07. However, on cross examination the
President
testified that at the time Section 19.07 was proposed, he did not realize that. He also
testified that
at the time he "never looked at it, didn't apply to anybody." He also testified to the effect
that he
never considered what was being proposed. And that at the time he never believed that what
was
being proposed was the Village actually paying 92.5 percent of the retiree health insurance
premiums, "because nobody had retired." The undersigned credits his statements and
understandings
as expressed in cross examination because it shows his reasoning at the time. His cross
examination
answers are also consistent with the testimony of Village negotiator Pirky, that she said
during
negotiations that the source of the 92.5 percent would be the bank. And this is consistent
with the
Village motivation in proposing the Section to make the operations of the Village consistent
across
the AFSCME and non-representeds' retiree health insurance banks, as well as keeping to a
single
insurance plan for actives and retirees.

The undersigned is persuaded that at the time Section 19.07 was proposed, the
Association
did not have an understanding that retiree health insurance premiums in any percentage or
amount
would be paid by the Village from any source other than the bank. Without such an
understanding,
it could not have been the Association's intent by agreeing to Section 19.07 that the Village
would
pay 92.5 percent of such premiums from any source other than the bank. And there is no
evidence
to suggest the Village had an intent to pay from a source other than the bank All evidence of
the
Village intent is that it did not intend to pay from any source other than the bank. Thus,
bargaining
history shows the language was not understood or intended by either party to fund premium
payments the way the Association now argues. Rather, the Village expressed its intent
behind
Section 19.07, the Association did not question or object to that, and accepted it. This
bargaining
history strongly supports the Village position that the intent of the parties in adopting Section
19.07
was that the bank would be the source of the 92.5 percent of the retiree premium cost.

It also seems extremely unlikely that the Village would propose such a potentially
large
benefit to the Association, under the Association position, without negotiating something
specific
in return or in regard to it. Nothing in the record indicates that either party had that
understanding
when the language was agreed to. The language of all three Sections read together along
with the
bargaining history persuades the undersigned that the source of the funds by which the
Village is
required to pay retiree health insurance premiums is from the retiree health insurance bank
and not
from another source.

An additional aid in determining the intent of parties to a collective bargaining
agreement
is any relevant past practice. Both parties have made past practice arguments here to the
effect that
there is no past practice that supports the other party's position. Both are correct. The
record
establishes no past practice between the Village and the Association as to how retiree health
insurance premiums are paid or the source of the payments. Any past practice between the
Village
and the AFSCME bargaining unit cannot and does not bind the Association. The Village
practice
as to the non-represented employee retirees cannot bind the Association. And, there having
been no
former Association retirees, there is no fact situation

Page 16

MA-13673

for any past practice to have been established between these parties. While the fact
that the Village
may have had a practice in how it used or paid premiums for AFSCME or non-represented
retirees
might help understand its intent when proposing Section 19.07 during negotiations, it is not
binding
here. The Village does not argue otherwise. There is no past practice that aids
interpretation here.

There is the matter of Pirky's misunderstanding of how the retirees paid the 7.5
percent and
how Officer Buddenhagen's out of pocket payments were made. This is the matter discussed
in the
November 6th letter. Whether argued as a past practice, a mistake, a
drafting error, or something else,
once Buddenhagen retired he began paying the 7.5 percent of the premium cost to the Village
out
of pocket. That matter does not have any impact on the instant grievance. The grievance
which is
the subject of this arbitration was filed months before Buddenhagen retired in July of 2007.
The
grievance submitted alleges a grievance date of February 1, 2007. Whether the retiree
contributions
toward premium cost as set out in Section 19.07 and Section 19.04 come from the
retiree health
insurance bank along with the Village payment, are out of pocket, or who makes that
decision, are
matters that exceed the precise issue submitted for arbitration. Section 3.04 of the collective
bargaining agreement prohibits an arbitrator from determining any other issue than that
submitted
for arbitration. The issue submitted requires a determination if the Village has an obligation
to pay
retiree health insurance premiums from any source or funds other than the retiree health
insurance
bank. Whether the retiree makes an ongoing contribution or has the contribution come from
the bank
is a different issue. And given the dispute between the parties that prompted the filing of the
grievance in the first place, how the Village and Buddenenhagen administered the 7.5 percent
of the
cost cannot be said to have created any past practice binding on the Association or the
Village. The
Association did not express any consent to what the retiree and the Village did after the
original
grievance was filed.

As to the grievance filed in this case, the Village's application and interpretation of
Section 19.07 does not violate the terms and conditions of the collective bargaining
agreement.
Accordingly, based on the evidence and arguments presented in this case I issue the
following

AWARD

The grievance is denied and dismissed.

Dated at Madison, Wisconsin this 7th day of May, 2008.

Paul
Gordon, Arbitrator

rb

7292

1 Based upon calculations supplied by
and performed by the Village.

2 The projections in both scenarios
assumes a premium increase of 6% per year for the total cost of the premium
based on historical data, with a beginning total monthly premium of $1043.19 as of June,
2007.